Technical Picks | October 7, 2017
Market lacking direction, still better to stay cautious
Sensex (31814) / Nifty (9980)
Nifty Weekly chart
Source: Falcon
Future outlook
After an extended weekend, the Nifty index started trading on a positive note and crept higher throughout the week. With a firm
upmove seen in Friday’s session, the index managed to register gains of 1.95 percent over its previous week’s close. The sectoral
indices such as the Nifty Energy, Nifty Metals and the Nifty Pharma index were the outperformers during the week with gains of 3-5
percent.
If we observe the recent price action, it is seen that post correcting from the high of 10179 to 9687, the Nifty has pulled back higher
during this week and has concluded near the 61.8% retracement level of the mentioned correction. We were of the view that levels
around 9950 would act as a strong resistance on closing basis; but due to Friday's upsurge, the Nifty surpassed this level marginally.
Now if we look at it from broader perspective, it is observed that the index has been broadly consolidating in a range of 9680-10180
since almost three months. Hence, unless the index breaches this range, we are unlikely see any directional movement in the index.
Thus, we would still avoid creating fresh longs in the index at current juncture and rather advise our readers to focus on stock
specific moves in the coming week, where there could be better opportunities seen on both sides of the trade.
As mentioned above, the Nifty index has ended the week near the resistance of 9990, which is the 61.8% retracement of the recent
corrective move. If the index manages to continue the positive momentum, then the index could extend the gains upto its
resistances of 10050/10140. On the flipside, 9880 is now a crucial support for the coming week, which if breached, could lead the
index to resume the corrective trend to test the recent low.
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1
Technical Picks | October 7, 2017
Index hovering around resistance, time to buy puts
Nifty spot closed at 9979.70 this week, against a close of 9788.60 last week. The Put-Call Ratio has increased to 1.37 from 1.20 levels and
the annualized Cost of Carry is positive at 4.33%. The Open Interest of Nifty Futures increased by 14.96%.
Derivatives View
Nifty current month future closed with a premium of 23.70 points against a premium of 11.95 points to its spot. Next month future is
trading with a premium of 52.25 points.
PCR-OI has surged from 1.37 to 1.20 on week on week basis mainly because of huge build-up in put options. In call option, 10100 strikes
added some fresh positions; followed by unwinding in 9700-9800 and 10000 call options. While, in put options, 9800-10000 strikes were
most active and they also added significant positions. In addition, some open interest addition was also witnessed in 9500-9700 put
options. At current juncture, maximum open interest concentration in October series is placed at 10000 call and 9800 put option.
The benchmark index rallied 2% with decent open interest additions, suggesting some long formation last week. FIIs formed mixed positive
in this recent upmove; while, short formed in last series are still intact. At present, index is hovering near its strong hurdle of 9950-10000
and INDIAVIX is now trading on the lower side; thus, both hints market to attract selling soon. At the same time, despite Nifty is around its
resistance zone we can hardly see any relevant unwinding in 10000 call options. Thus, traders are advised to exit from their existing long
positions and prefer buying 9900 put option.
Long Formation
Short Formation
OI
OI
Price
OI
OI
Price
Scrip
Price
Scrip
Price
Futures
Chg (%)
Chg (%)
Futures
Chg (%)
Chg (%)
GAIL
17768000
43.89
451.75
8.20
STAR
2884500
30.82
841.95
(5.15)
BATAINDIA
2225300
27.07
743.10
7.19
DISHTV
21553000
30.41
71.95
(4.00)
GRANULES
17535000
26.47
122.45
7.51
IRB
19082500
13.67
209.85
(2.10)
TATASTEEL
26604000
19.39
694.65
6.25
IDEA
60900000
7.45
74.25
(4.56)
NATIONALUM
23696000
18.72
82.20
4.85
HCC
27108000
4.34
33.45
(2.48)
SOUTHBANK
157486032
18.92
31.80
12.17
BHARTIARTL
25336800
3.56
383.25
(1.81)
JUBLFOOD
2093000
18.18
1549.45
11.16
HEROMOTOCO
1908800
3.39
3724.00
(1.85)
NIITTECH
960000
37.04
562.95
1.75
RCOM
125580000
2.99
17.25
(10.62)
Weekly change in OI
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2
Technical Picks | October 7, 2017
Research Team Tel: 022 - 39357600
Website: www.angelbroking.com
For Technical Queries
E-mail: [email protected]
For Derivatives Queries
E-mail: [email protected]
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